KUALA LUMPUR (Nov 19): KESM Industries Bhd’s share price fell as much as 72 sen or 6.84% to RM9.80 in Bursa Malaysia morning trades today after the semiconductor burn-in and test services provider said yesterday its first quarter net profit dropped to RM764,000 from RM4.53 million a year earlier and amid broader market losses today.

At 10:50am today, KESM pared losses at RM10.10.

The counter saw 63,800 shares changed hands. At KESM’s lowest share price so far today at RM9.80, the company has a market capitalisation of about RM421.5 million.

The group announced yesterday that net profit fell in the first quarter ended Oct 31, 2020 (1QFY21) as revenue dropped to RM61.11 million from RM72.39 million.

Today, CGS-CIMB Securities Sdn Bhd analyst Mohd Shanaz Noor Azam wrote in a note that KESM’s 1QFY21 results were in line with the research firm's expectation, but fell below consensus estimate. 

"KESM returned to profitability after two successive loss quarters,” Mohd Shanaz said.

"We are encouraged to see a recovery in KESM’s sales and profitability in 1QFY21.

"We upgrade the stock from Reduce to Hold with a higher RM10.80 target price (TP), based on a higher 1.3x P/BV, in line with KESM’s 5-year historical mean in view of a recovery in automotive semiconductor demand going into CY21F,” he said.

Meanwhile, Kenanga Investment Bank Bhd analyst Samuel Tan wrote in a note today that Kenanga maintained its market perform call for KESM shares but with a higher TP of RM10.60 from RM8.60 previously.

"While the group has been slower to recover compared to its peers, we expect to see continuous improvement from here on with better prospects in 2021,” Tan said.